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TMI Blog2019 (1) TMI 1681X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, 1. MA No. 524 of 2018 has been filed by Resolution Professional in connection with CP(IB) No.1053/2017 in case of Amar Remedies Ltd. under section 30(6) of the I&B Code, 2016 read with Regulation 39(4) of IBBI (Insolvency Resolution process of Corporate Persons) Regulations 2016 for approval of Resolution Plan by Adjudicating Authority on the ground that the Resolution Plan has been approved by the Committee of Creditors in its 7th COC meeting with a vote share of 83.02%. While hearing the arguments, the Ld. Counsel appearing on behalf of IDBI Bank Ltd., brought to our notice that after Hon'ble High Court's order for liquidation of the company, this petition was filed under section 10 of the Code, after suppressing the material facts by the Corporate Applicant, without disclosing that the company has been wound up by order of the Hon'ble High Court. The Ld. Counsel appearing on behalf of IDBI bank has drawn our attention towards the order of the Hon'ble High Court, Bombay, dated 25.1.2017 passed in Company Petition No. 7/2015. In the said case Hon'ble High Court passed the following order: "2. Ld. Counsel for the respondent states that the proceedings before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion got admitted relying on the documents submitted by the Corporate Applicant. It is unbelievable that CoC members, i.e. Financial Creditors and the Resolution Professional were not aware of the fact that the company has been wound up. But the CIRP process got initiated by the Corporate Applicant, and after the admission of the petition, the Resolution Plan got approved. This is a flagrant example of invoking CIRP fraudulently with malicious intention, which is punishable u/s.65 of the Code. Let explanation be called from CoC Members and Resolution professional as to why action should not be taken against them u/s. 65 of the I&B Code." 5. In reply to the above notice, Suspended Directors of the Corporate Director, Pratima P Shah has filed affidavit wherein it is stated that "the applicant has filed a reference with the BIFR and the same was registered as Case No.55 of 2014. The reference was filed in the background of the Company Petition No.289 of 2013 which was admitted and order of winding up was passed by the Hon'ble High Court of Bombay on 27.8.2014. The above reference was preferred by the applicant, i.e. Corporate Debtor company for removal of its sic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to suppress any fact from this Tribunal. The Corporate Debtor proceeded on the advice and filed Form 6 as was required by law. It is further stated that Section 238 of the IBC has an overriding and non obstantive clause which would mean that in the event of conflict between the provisions of Companies Act and the IBC, the later would over ride the provision of Companies Act, 1956 over 2013." 6. It is clarified that transparency is hallmark in today's corporate world. There is no bar to provide any additional information in support of the petition in addition to the details sought in the prescribed form. Therefore, the plea of the Corporate Applicant is not tenable/ weaker and putting responsibility on office of NCLT is also not tenable. 7. The Axis Bank, a Member of CoC, submitted an Affidavit stating that Corporate Debtor has obtained the Admission Order dated 16.6.2017 by suppressing the facts of the revival of winding up proceedings concealing the same from this Tribunal. It is further stated in the affidavit that in the light of suppression of the material facts, the Application of the Corporate Debtor under section 10 of I&B Code be dismissed, as not maintaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 106 of the Companies Court Rules, 1959. The Hon'ble High Court vide order dated 1.8.2013 admitted the C.P. No.26/2013 and by order dated 27.8.2014 was pleased to wound up the Corporate Debtor. It is further stated in the Affidavit of IDBI Bank that reference filed by the Corporate Debtor before BIFR got abated. Hence an appeal was filed by the Corporate Debtor before AAIFR challenging the abatement order. In such circumstances, the Hon'ble High Court was pleased to adjourn sine die the Official Liquidator's Report vide order dated 15.11.2016, as proceeding under Company's winding up petition cannot take place during the pendency of the Appeal before AAIFR. Copy of Hon'ble High court's order dated 15.11.2016 is annexed along with Affidavit as Annexure - F. The Corporate Debtor, during proceeding in CP No. 7/2015, informed the Hon'ble High Court that proceedings before AAIFR by the Corporate Debtor is also abated and the Corporate Debtor is already wound up. Given the said admitted fact, the Hon'ble High Court vide order dated 25.1.2017 was pleased to direct the Official Liquidator to proceed with the procedure of winding up expeditiously. 11. It is further contended by ID ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor filed proceedings under section 10 without disclosing that the winding up order has already been passed by the Hon'ble High Court against and the company has been wound up. The Official Liquidator had been directed by the Hon'ble High Court to proceed with the procedure of winding up expeditiously. It is further stated in the Affidavit of IDBI Bank that before the 2nd COC meeting dated 17.11.2017 the IDBI Bank vide email 16.11.2017 intimated to the RP about the winding up order of the Hon'ble High Court dated 25.1.2017. It is further stated that the officers of the IDBI Bank attended the 2nd CoC meeting 17.11.2017 and categorically informed the entire CoC that the Hon'ble High Court vide order dated 27.8.2014 had already liquidated the Corporate Debtor and proceedings under I&B Code is bad in law. It is further stated in the Affidavit that the said discussion was recorded in the minutes of the CoC as agenda item No.10. A copy of the minutes has been annexed as Annexure - "J"with the Affidavit. On perusal of the minutes of CoC, it appears that the Financial Creditor IDBI Bank has informed the CoC about the order dated 25.1.2017 passed by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation received by him of Liquidation order passed by the Hon'ble High Court. It is also clear from the perusal of the record that the RP has also submitted a progress report, containing the minutes of the 2nd CoC informing about the liquidation order passed by the Hon'ble High Court. Thus it is clear that the RP and the members of CoC are not responsible for the action of the Corporate Debtor, whereby the Corporate Debtor filed the Petition under section 10 of the IB Code, without disclosing that the Liquidation order has been passed by the Hon'ble High Court. 22. It is pertinent to mention that the Corporate Debtor has filed the petition under section 10 of the IB Code, 2016 vide CP No.1053 of 2017 on 29.5.2017 without disclosing that a liquidation order has already been passed by the Hon'ble High Court. Section 11 of the I & B Code provides that: 11. Persons not entitled to make application.- The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely- (a) a corporate debtor undergoing a corporate insolvency resolution process; or (b) a corporate debtor having completed corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s than one lakh rupees, but which may extend to one crore rupees, or with both. Explanation.- For the purposes of this section and Sections 75 and 76, an application shall be deemed to be false in material particulars in case the facts mentioned or omitted in the application, if true, or not omitted from the application as the case may be, would have been sufficient to determine the existence of a default under this Code. Thus it is clear that where the corporate debtor initiates corporate insolvency process after suppressing material facts, then he will be liable for punishment u/s 77 of the I & B Code 2016. 26. The Ld counsel representing the Resolution Professional and counsel appearing on behalf of Corporate Debtor, i.e. corporate applicant emphasized that based on various judicial pronouncement and existing rules the corporate debtor was within its right to apply with BIFR. Accordingly, the application filed by the corporate debtor was accepted and winding up proceedings were suspended. 27. It is pertinent to mention that here we are not concerned with the views of Resolution Professional or any of the Financial Creditor regarding the right of the corporate debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S 10 of I & B Code for initiation of CIRP. It is important to refer to the order of the Hon'ble High Court dated 1st August 2013 passed in Company Application No 26 /2013 which is as follows: "1. The Petitioner seeks winding up of the respondent M/s. Amar Remedies Ltd. The dues claimed by the Petitioner are to the tune of Rs.12,80,04,500/-. According to the Petitioner, the respondent company is liable to pay the Petitioner under the Facility Agreement dated 25th January 2010 which the Respondent-company has failed to pay. Cheques issued by the respondent have been dishonoured. 2. The respondent-company has filed reply stating that the statutory notice has not been sent. The learned Counsel for the Petitioner submitted that notice is sent to both the registered address of the company as well as the address mentioned in the correspondence. Perusal of the reply shows that no substantial reason has been given as to why the debt is being disputed. The company petition No.517 of 2012 and other connected matters have been admitted against the respondent - company and advertisement has been directed to be issued. 3. In the circumstances, the company petition is admitted." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t above of the Corporate Debtor was under the legal remedy and the right which was duly exercised as provided to the Corporate Debtor by the statute (both under the Repeal Act and the IBC). 31. It is further contended by the Corporate Applicant that at the time when the application was made by the Corporate Debtor, the procedure of the NCLT was in the infancy stage and the Form 6 requested for specific information which was duly provided. Form 6 did not prescribe or require the corporate Applicant/corporate Debtor to furnish any additional information nor was any procedure/requirement pointed out by the office of NCLT which mandated the Corporate Debtor to submit any additional information. 32. The corporate applicant has relied on the following provision of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003. Section 4. Consequential provisions 4. Consequential provisions.-On the dissolution of the Appellate Authority and the Board,- (b) On such date as may be notified by the Central Government in this behalf, any appeal preferred to the Appellate Authority or any reference made or inquiry pending to or before the Board or any proceeding of whatever na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idation order passed in a winding-up petition against the corporate debtor then it is barred from filing a petition under section 10 of the Code. Here the corporate debtor has not only suppressed the material fact that the winding up petition has not only been filed and admitted, but liquidation order has also been passed against the corporate applicant/corporate debtor liquidator has been directed to expedite liquidation proceedings expeditiously. The corporate applicant suppressed this material fact, knowing it to be material, and filed the petition under section 10 and in contravention of Rule 10 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The alleged act of the corporate applicant is punishable under section 77 (a) of the Insolvency and Bankruptcy Code 2016. The Registrar of Companies, Mumbai is directed to lodge prosecution against the corporate applicant under section 77(a) of the insolvency and bankruptcy code in 2016. 36. Since the petition has been filed under section 10 of the Insolvency and Bankruptcy Code 2016 after the suppression of the material facts, which were known to be material, therefore the petition is rejected wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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